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Article 8
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In the underwriting of securities offered through competitive auction, the lead underwriter shall first prepare documentation determining the particulars listed in the subparagraphs below. After being signed or sealed by the lead underwriter and co-underwriters and the issuer of the securities, said documentation shall be reported to the Taiwan Securities Association three business days before the commencement date of the tender:
- the total number of underwritten units, number of units expected to be sold via overallotment, number of units held by the securities underwriter for its own account as prescribed by Article 4-1, the number of units offered by competitive auction, minimum bidding unit, and maximum bid quantity per bid form;
- the minimum offering price as resolved by negotiation with the issuer;
- the firm-commitment fee or best-efforts underwriting fee, as resolved by negotiation with the issuer;
- the unit size of lots offered through public subscription;
- the names of the members of the underwriting syndicate, and the amount of securities apportioned to each, as specified by Article 7;
- except for the initial listing of shares on a stock exchange or an OTC market, the method of allocating among the members of the underwriting syndicate any units that remain unsubscribed after conclusion of competitive auction;
- the date(s) of competitive auction and the time(s) for submitting and opening bids, as agreed in consultation with the Taiwan Securities Association.
- the issuer shall provide the securities underwriter with a list of the persons who are disqualified from participating in the tender and negotiated sale pursuant to Article 36 and Article 73, paragraph 5.
The minimum offering price in subparagraph 2 of the preceding paragraph shall comply with the following requirements:
- In an underwriting case involving an initial listing on a stock exchange or an OTC market, its upper limit shall be 70 percent of the simple arithmetic mean of the average trade prices, after factoring out ex-rights trading in connection with issuance of stock dividends (or ex-rights trading in connection with capital reduction) and ex-dividend trading, of the 30 business days on which trades have been executed before the filing of the competitive auction agreement with the Taiwan Securities Association. If the stock has not been registered and traded as an emerging stock, the underwriter and the issuer shall negotiate and set a reasonable minimum price for the auction.
- In the underwriting of a cash capital increase through an issue of common shares by a company already listed on a stock exchange or an OTC market in which all shares are put up for underwritten distribution, it shall not be lower than 90 percent of the simple arithmetic mean of the closing common share price, after factoring out ex-rights trading in connection with issuance of stock dividends (or ex-rights trading in connection with capital reduction) and ex-dividend trading, calculated for either the one, three, or five business days before the filing of the competitive auction agreement with the Taiwan Securities Association.
- In the underwriting of a cash capital increase through an issue of preferred shares, or of warrants that have been detached from preferred shares with detachable warrants or warrants that have been detached from corporate bonds with detachable warrants, by a company already listed on a stock exchange or an OTC market, its upper limit shall be the reference price calculated based on the appropriate pricing model selected at the time the fund-raising plan was reported to the competent authority.
- In the underwriting of convertible corporate bonds and corporate bonds with warrants, it shall not exceed the par value of said securities.
In the event that unsubscribed units as specified in paragraph 1 subparagraph 6 are placed by the underwriting syndicate with a specific party, only the parties listed in Article 35 shall participate in said placement, and those listed in Article 36 shall not participate.
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Article 35
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In the underwriting of securities by competitive auction, the securities underwriter is limited to accepting bids from the following persons:
- ROC nationals at least 20 years of age.
- ROC institutional investors and securities investment trust funds offered by securities investment trust enterprises.
- Overseas Chinese and foreign nationals, as permitted under the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals.
- The Development Fund of the Executive Yuan, the Postal Savings System, the Public Employees Pension Fund, the Labor Pension Fund, and the Labor Insurance Fund.
- Other parties granted permission by the government.
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Article 36
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When a securities underwriter accepts competitive auction bids, it shall obtain from each subscriber a declaration that it does not meet any of the descriptions set out in the following subparagraphs, and the underwriter shall refuse a bid if its discovers that the subscriber does meet one of the following descriptions:
- an equity-method investee of the issuing company (issuing institution);
- an investor that has equity-method investments in the issuing company (issuing institution);
- a company whose chairman or general manager is the same person as the chairman or general manager of the issuing company (issuing institution) or is the spouse thereof;
- a foundation that has received one-third or more of its paid-in endowment from the issuing company (issuing institution);
- the issuing company's (issuing institution's) directors, supervisors, general manager, assistant general manager(s), deputy assistant general managers, or any division officer serving directly under the general manager;
- the spouse of a director, a supervisor, or the general manager of the issuing company (issuing institution);
- a director, supervisor, or employee of the underwriting syndicate, or a spouse thereof;
- any person as set out in the preceding subparagraphs who participates in the offering under the name of another person (i.e. a person who meets the criteria of a de facto related party as defined in Article 2 of the Securities and Exchange Act Enforcement Rules).
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